Description of the event
The company released 24Q1 operating data. In 24Q1, retail sales of the Anta brand increased the number of units year over year, retail sales of the FILA brand increased by a higher number of units year over year, and retail sales of all other brands increased by 25%-30% year over year.
Incident reviews
Online retail discounts for the Anta brand improved, and the completion of the first quarter was in line with the company's expectations. In 24Q1, the number of units of retail sales of the Anta brand increased year-on-year. Online channels are expected to perform better than offline channels, and online channels are expected to grow by more than 20% (23Q1 online channels mainly sell inventory products, with a slight year-on-year decline). As of the end of 24Q1, the Anta Brand Library channel inventory turnover was less than 5 months, the best level of performance in the most recent quarter. Online retail discounts for the Anta brand have improved, and offline retail discounts are expected to remain flat. In 24Q1, the performance of the Anta brand was in line with the company's expectations, and completion in March is expected to improve further compared to January-January.
The FILA brand's online channel grew at a high base, and omnichannel retail discounts improved. In 24Q1, FILA brand retail sales increased by a high number of units over the same period last year. FILA large products are expected to perform better than FILA Kids and FILA Fusion. FILA Kids and FILA Fusion stores are optimized, and the number of stores is expected to decrease. By channel, online channels are expected to grow by more than 25% year-on-year in the case of a high base. By the end of 24Q1, channel inventory turnover was less than 5 months, online retail discounts improved by 3 pcts, offline retail discounts improved by 1 pct, and high quality brand growth continued.
All other brands saw a high increase in turnover, and the Kolon brand showed outstanding performance. In 24Q1, retail sales of all other brands of Descent and Colon Sports increased by 25%-30% year on year. Retail sales of the Colon brand are expected to increase by 50% year on year, and retail sales of the Descent brand are increasing by double digits year on year. Both online and offline retail discounts have improved.
Investment advice
In 24Q1, retail sales of Anta's main brands grew steadily, inventory conditions were healthy, and e-commerce retail discounts improved.
The FILA brand continues its high-quality growth trend. In the context of improvements in omni-channel retail discounts, retail sales growth is close to double digits. The completion of retail sales is in line with the company's expectations. The company maintains the same guidelines for the full year of 2024. It is expected that in 2024, the Anta brand and FILA brand sales will all increase by 10%-15%, the Descente brand turnover will increase by no less than 20%, and the Kolon brand turnover will increase by no less than 30%. Maintaining the profit forecast, the company's 2024-2026 earnings per share are expected to be 4.71, 4.85 and 5.47 yuan, respectively. The closing price on April 17 corresponds to 15.7/15.3/13.5 times the company's 2024-2026 PE, maintaining a “buy-A” rating.
Risk warning
The recovery in the domestic consumer market fell short of expectations; e-commerce channel growth slowed; industry competition intensified.